-- Published: Tuesday, 26 August 2014 | Print | Disqus
By Stewart Thomson
1. A week ago, I suggested gold would likely decline from the $1300 area to about $1275 and stop there, adding bullish symmetry to an inverse head and shoulders bottom pattern.
2. Please click here now. That’s the hourly bars chart for gold. It’s clear that gold declined to my targeted $1275 area “on cue”, and then surged higher early this morning.
3. To view the bullish symmetry this price action created on the daily chart head and shoulders pattern, please click here now. This bullish chart looks like Michelangelo sculpted it, from a block of golden marble!
4. Note the bullish action of the price stoker (14,7,7 Stochastics series). My first target is $1325.
5. Given the stunning Indian and geopolitical price drivers now in play in Iraq, Syria, and the Ukraine, I think gold could charge beyond $1325, and on towards the $1347 and $1390 area highs.
6. Silver, which is perhaps better referred to as “gold on steroids”, looks even better. Please click here now. The price stoker sits at an incredibly oversold level of about 10, and is now flashing a crossover buy signal, as it bursts above a key minor trend line. My suggestion to silver enthusiasts, is to be long and strong!
7. The hardline Islamist group commonly referred to as ISIS has created a quasi-nation state of enormous size. It stretches across huge parts of Iraq and Syria. On the week-end, they apparently captured a Syrian airbase, and they have stated plans to capture not only Baghdad, but the entire countries of Spain and Italy. The ISIS leader, “Al-Baghdadi”, has a doctorate degree. It’s probably not a wise idea to underestimate the man’s capabilities.
8. While I don’t think many analysts understand the seriousness of this situation yet, Mid-East geopolitics threatens to become a much bigger gold price driver than QE ever was.
9. Over the past month, bank economists around the world have almost universally dropped their bearish viewpoints on gold, and adopted a generally supportive outlook.
10. A “$1200 floor” is a common expression used by the top economic guns now. That’s a welcome change, and the gold charts certainly support this new and “improved” analysis, of the world’s mightiest metal!
11. I’ve argued that the year of 2014 is a year of transition, from deflation to inflation. As a gold price driver, the economic super-crisis is on the back burner, and strong growth that produces relatively more inflation than GDP is on the front burner.
12. Please click here now. That’s the latest PMI flash report for US manufacturing growth. It’s acting like a hungry pitbull. I’m predicting that it will only take three or four more such reports, to make high quality institutional money managers start ringing their inflation alarm bells.
13. Rising food prices can create huge institutional liquidity flows into gold. Commerzbank agricultural market analysts are amongst the best in the business. To view their current analysis of the wheat market, please click here now.
14. Please click here now. That’s the latest COT report for wheat. The commercials (aka the “banksters”) are net long the wheat market, while the hedge funds are net short! Is wheat on the verge of soaring higher, and will that produce sizable institutional liquidity flows into gold? I think so.
15. In the big picture, India is the most important price driver for gold. The news coming out of the land of the “titans of ton” is now very bullish.
16. Please click here now. While about one third of the entire population of India has no electricity, that state of affairs is changing very quickly. As Indian citizens get access to the internet, they are rushing to buy gold in online accounts. Over the next couple of years, I expect this online buying will go “off the charts”.
17. Because a picture arguably speaks a thousand words, please click here now. The road sign says “Pot Of Gold Ahead”. I think that applies to any investor who owns shares of gold mining stocks.
18. ‘Gold likely to regain sheen in second half of 2014: Despite the possibility of deficient monsoon casting a shadow on the rural demand, riding on overall better sentiments gold is expected to recover its sheen in the second half (July-December) of the year, Somasundaram P.R, managing director (India), World Gold Council (WGC) said. “The second half will be a better one as compared with the previous year. The first half (January-June) was affected by the 80:20 rule on exports and expectations that there will be a duty cut. “People were hoping that the price will get back to the Rs.25,000 ($413) per 10 grams zone. Then there was election till the second quarter (April-June), which did have its own impact on demand. There were also a lot of operational issues for the trade,” Somasundaram told IANS in an interview.’ - The Gulf Today News, Aug 25, 2014.
19. If anyone deserves the “man of the year” title, it’s probably WGC director P.R. Somasundaram. I’m in complete agreement with his superb assessment of the current gold market.
20. Gold is set to regain its sheen, and so are the mining stocks held by the Western gold community.
21. Please click here now. That’s the GDX daily chart. GDX is in a nice uptrend channel now. In the short term, it’s consolidating in a bullish rectangle formation.
22. My suggestion to Western gold stock investors is to treat the gold bull era like a fine wine. Savour each moment.
23. Out with the old, and in with the new. The new era is not a chug-a-lug contest for “parabola demanders”. Nor is it a QE reunion party. This is a new era of consistently growing demand for gold jewellery, created from gold that is mined.
24. Soon this key source of demand will surpass mine and scrap supply. The man who I’ve dubbed the world gold community’s man of the year, seems to be hinting it could happen right now!
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-- Published: Tuesday, 26 August 2014 | E-Mail | Print | Source: GoldSeek.com